Rail bosses lower bonus targets
The Times
June 24, 2003
By Ben Webster and Angela Jameson
Rail bosses lower bonus targets
DIRECTORS of Network Rail are set to earn more than £1 million after lowering train punctuality targets in order to trigger higher performance bonuses, it emerged last night.
The five men running the not-for-profit successor to Railtrack stand to make 60 per cent on top of their combined salaries of £1.75 million. They will earn the money if 84 per cent of trains arrive on time in the financial year ending in March 2004. Last year their target was 85.5 per cent. Punctuality has improved since the spring, but mainly because of the Strategic Rail Authority's decision to reduce the number of trains on the network.
The directors are virtually certain to receive the lower end of the bonus, triggered if 82 per cent of trains run on time. Even the top figure of 84 per cent is substantially below that achieved by British Rail and Railtrack in earlier years.
In the year before the Hatfield crash of October 2000, 88 per cent of trains ran on time. Network Rail's directors received no performance bonus last year but shared £1.14 million in bonuses for helping in the transition from Railtrack. John Armitt, the chief executive, received £761,000 last year, including a bonus of £225,000 to reflect the "successful transfer of Railtrack plc out of administration".
Chris Leah, the safety director, received £872,000, including a £450,000 bonus for agreeing to stay on while Railtrack was in administration. Mr Leah was the highest-paid director in a year that included the Potters Bar train crash.
Details of the payments emerged as the High Court approved £48.4 million of fees for the accountants, bankers and lawyers who helped to run Railtrack during its year-long period of administration. Ernst & Young, the administrator appointed by Stephen Byers, the former Transport Secretary, in October 2001, received the biggest slice of taxpayers' money; its bill was £20.4 million.
Other advisers' fees approved by the court yesterday included £14 million for Deutsche Bank, £2.5 million for Citigroup, £8 million for Slaughter & May, the law firm, and £3.5 million for Simmons & Simmons, a rival City law firm. All the advisers were working for the administrators from October 7, 2001, to October 3, 2002.